Sterling in Strong Recovery vs EUR, But USD Dominates FX in London PM
- Last Updated: 02 April 2014
Updated: Our Live coverage shows the UK pound to be in a period of consolidation at the start of April 2014. With the March PMI series missing expectations the GBP has found little by way of impetus. However, all eyes are on the release of the Service Sector PMI on Thursday which should set the near-term tone.
Keep in touch with our Live Coverage Here. For the archived material for the day in question please scroll through please scroll down.
By Rob Samson
Up to date British pound (GBP) exchange ratesPound sterling to euro exchange rate: 0.34 pct up on yesterday at 1.2167. Pound sterling to US dollar exchange rate: 0.45 pct lower at 1.6488. Pound sterling to Australian dollar exchange rate: 0.76 pct lower at 1.8814. Pound sterling to Canadian dollar rate: 0.38 pct lower at 1.8437. Pound sterling to New Zealand dollar exchange rate: 0.4 pct higher at 2.0242.
BE AWARE: All the above quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.16:40: Month end fix to benefit the USD at expense of GBP
The month end fix lies ahead, currencies will move as portfolio managers rebalance existing currency hedges. Barclays tell us what they are predicting:
"Recent turmoil in major EM countries has weighed on global risk sentiment, putting equity markets in developed countries under pressure. In USD terms, the US equity market has posted the largest decline in market value, while Japan’s bond market outperformed the rest, helped by heightened risk aversion as well as JPY’s appreciation on the month (Figure 1). Given the relative underperformance of US equity markets, our month-end fixing model is showing a strong USD buy signal against EUR and JPY and a modest USD buy signal against GBP, CAD and AUD."16:30: Draghi could put an extra bid into the pound sterling
Jean-Pierre Dore at Western Union:
"The British pound gave up close to 1 percent to the USD following the Fed decision and weaker-than-expected domestic money supply data that showed a cooling in business investment.
However, sterling found some support in the 1.6400 region and now traders are looking ahead to next week’s ECB meeting and Bank of England (BoE) meeting, where Draghi is expected to strike a dovish tone which should put a further bid into the pound.16:21: CAD forecasts lowered
TD Securities have lowered their USD/CAD forecasts for 2014 quite drastically. Rest assured GBP/CAD will likely move in sympathy.15:24: GBP against stubborn resistance vs CAD
Shaun Osborne of TD Securities updates us on the brick wall currently being encountered in GBP/CAD:
"GBPCAD remains capped under 1.8550 (tested five times over the last six days) but the short-term trend higher remains constructive and the broader trend is bullish — we continue to target higher levels (towards 1.92). Corrective, near-term weakness may extend below short-term trend channel support at 1.83 but losses are unlikely to extend below 1.80/1.81, we feel. Clear gains through 1.8550 from here should trigger another fairly rapid advance towards 1.90."
Note that tomorrow we get Canadian GDP, expectations are for +0.2% - a miss could be what is required to crack the ceiling.14:05: GBP in fresh assault on EUR as stocks recover
Interesting action in the pound euro rate. After having slumped earlier in the day GBP/EUR is now 0.28 pct higher at 1.2160.
Note that the US dollar is asserting itself across the board, and selling in EUR/USD could be weighing on the entire EUR complex, hence we are seeing the gains in GBP/EUR.
Markets are also turning more chipper with some good earnings out of some big name US stocks like Facebook.
On the macro front we see the USD has been supported:
"Data from the US showed that US jobless claims increased more than forecast over the past week, climbing by 19,000 to 348,000. Adding to negativity, US GDP data came in slightly less than expected with the economy growing 3.2% versus the 3.3% expected. Although the figure didn’t meet expectations, the figure was the highest in three years, laying the ground for further improvement in 2014." - Lee Mumford at Spreadex.12:29: Blame it on the euro - EUR/USD pressuring GBP/USD lower
An insight into the dynamics of the British pound today from FX Market Alerts:
"GBP is lower this morning, with the Cable rate largely driven by selling in EUR/USD. Through 1.6500, the pair remains heavy into support at 1.6470-75 levels, and with stops reported from 1.6460 lower down, these look pretty vulnerable for now.
"As such, EUR/GBP is getting a small bid, as Swiss supranational buying in EUR/USD is presumed to be on behalf of an Asian central bank - no change there then. EUR/GBP stops assumed through .8260 - the high from Wednesday. UK lending data was pretty healthy, though money supply dropped significantly on the month, and was much lower than expected."11:19: Pound / dollar forecasts
UBS:
"As bullish conditions persist, there’s further upside potential to resistance at 1.6747. A break above which would open the way to 1.7043. Support is at 1.6447 ahead of 1.6310."
Forex.com:
"GBP/USD edging lower for a second day as price continues to fail to hold above 1.6600 - potentially in the process of forming a reversal despite solid fundamentals. But bullish trend ~1.6380 still intact."10:45: The EUR/GBP decline will be slow, but sure
With the EUR/GBP rising on Thursday it is worth taking stock and remembering the big picture.
David Song, Currency Analyst and Daily FX Research, reckons 2014 will see Sterling advance at a steady pace vs the euro:
"Even though the EURGBP is a slower‐burning trade, the long‐term outlook remains tilted to the downside as it retains the bearish trend dating back to 2009. However, a steeper decline appears to be take shape as Mark Carney’s BoE moves away from the easing cycle. With that said, we will continue to look for a series of lower highs to sell the EURGBP, and the pair remains poised to face a pronounced decline in 2014 as the ECB prepares to implement more non‐standard measures in the coming months."10:12: Pressure on sterling builds
We are seeing some selling pressure being exerted on sterling at present.
"Pressure on Sterling builds and a move below 1.21 is in sight." - Caxton FX.
"GBPUSD testing 1.6450 support - break below here paves the way for 1.6380." - Forex.com.10:00: Euro aided by decent eco readings
The euro is on the front foot against sterling.
EU Consumer Confidence improves to -11.7 in January from -13.5 in December.
EU January Economic Sentiment Indicator increase to 100.9 vs 100.4 (December).
EU Services Sentiment up to 2.3 in January from 0.4 in December.10:06: GBP/ZAR lower, but further pressures on ZAR forecast
All eyes remain on the emerging markets where currencies have taken a bashing of late. "The ZAR will likely be among the most pressured units if the EM sell-off continues," say Barclays referring to the South African Rand. We have just updated readers with view on the Rand and Hungarian Forint.08:42: Forecasting 1.65 to 1.66 band for the British pound to US dollar
"Cable is likely to still trade in the 1.65/1.66 band,after BoE Governor Mark Carney stated that the UK recovery has still “some way to run” before the bank considers interest rate moves and that “the rate rise will be gradual.” EUR-GBP will likely trade close to 0.8250." - UniCredit Bank.08:35: Safe haven currencies remain well bid
Big rally occurred in the safe haven Yen and Swiss Franc yesterday following the general risk off tone.
"US 10Y yields have been dragged even lower but we think this is likely to correct in the near future offering both USD-JPY and USD-CHF some relief," say UniCredit Bank.08:30: British Pound (GBP) forecast in 1.6530-1.6630 range vs USD
The British pound (GBP) is trading higher against the New Zealand dollar today (NZD) however we are seeing weakness against the US dollar (USD). Two overnight events were responsible for these moves, they are listed in the two previous entries.
Despite GBP/USD being lower, Lloyds Bank don't expect any major moves lower:
"Today’s domestic releases look unlikely to trigger much market reaction. The consumer credit and mortgage lending numbers are expected to further highlight the resilience of the consumer sector helped by a pickup in housing activity and easier credit conditions. We expect GBP to remain well supported reflecting the recent run of decent domestic releases. GBP/USD looks likely to remain within the recent 1.6530-1.6630 range."Overnight Alert: British pound shoots higher vs New Zealand dollar
The pound sterling has shot higher against the New Zealand dollar despite the Reserve Bank of New Zealand's promise to begin raising interest rates soon from the current 2.5%. This tells us markets were confident of a rate hike. The only kiwi negative comment made by the Central Bank Governor Wheeler was his concern about the strong currency.Overnight Alert: Top 4 takeaway of US FOMC decision
Thanks to Kathy Lien for the following summarisation of the key elements of today's FOMC decision:Fed Tapers by Another $10 billion, Starting February $5 Billion Reduction each in MBS and Treasuries Uber Dove Janet Yellen Supports Taper Decision was Unanimous
BE AWARE: All the above quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.
16:40: Month end fix to benefit the USD at expense of GBP
The month end fix lies ahead, currencies will move as portfolio managers rebalance existing currency hedges. Barclays tell us what they are predicting:
"Recent turmoil in major EM countries has weighed on global risk sentiment, putting equity markets in developed countries under pressure. In USD terms, the US equity market has posted the largest decline in market value, while Japan’s bond market outperformed the rest, helped by heightened risk aversion as well as JPY’s appreciation on the month (Figure 1). Given the relative underperformance of US equity markets, our month-end fixing model is showing a strong USD buy signal against EUR and JPY and a modest USD buy signal against GBP, CAD and AUD."
"Recent turmoil in major EM countries has weighed on global risk sentiment, putting equity markets in developed countries under pressure. In USD terms, the US equity market has posted the largest decline in market value, while Japan’s bond market outperformed the rest, helped by heightened risk aversion as well as JPY’s appreciation on the month (Figure 1). Given the relative underperformance of US equity markets, our month-end fixing model is showing a strong USD buy signal against EUR and JPY and a modest USD buy signal against GBP, CAD and AUD."
16:30: Draghi could put an extra bid into the pound sterling
Jean-Pierre Dore at Western Union:
"The British pound gave up close to 1 percent to the USD following the Fed decision and weaker-than-expected domestic money supply data that showed a cooling in business investment.
However, sterling found some support in the 1.6400 region and now traders are looking ahead to next week’s ECB meeting and Bank of England (BoE) meeting, where Draghi is expected to strike a dovish tone which should put a further bid into the pound.
"The British pound gave up close to 1 percent to the USD following the Fed decision and weaker-than-expected domestic money supply data that showed a cooling in business investment.
However, sterling found some support in the 1.6400 region and now traders are looking ahead to next week’s ECB meeting and Bank of England (BoE) meeting, where Draghi is expected to strike a dovish tone which should put a further bid into the pound.
16:21: CAD forecasts lowered
TD Securities have lowered their USD/CAD forecasts for 2014 quite drastically. Rest assured GBP/CAD will likely move in sympathy.
15:24: GBP against stubborn resistance vs CAD
Shaun Osborne of TD Securities updates us on the brick wall currently being encountered in GBP/CAD:
"GBPCAD remains capped under 1.8550 (tested five times over the last six days) but the short-term trend higher remains constructive and the broader trend is bullish — we continue to target higher levels (towards 1.92). Corrective, near-term weakness may extend below short-term trend channel support at 1.83 but losses are unlikely to extend below 1.80/1.81, we feel. Clear gains through 1.8550 from here should trigger another fairly rapid advance towards 1.90."
Note that tomorrow we get Canadian GDP, expectations are for +0.2% - a miss could be what is required to crack the ceiling.
"GBPCAD remains capped under 1.8550 (tested five times over the last six days) but the short-term trend higher remains constructive and the broader trend is bullish — we continue to target higher levels (towards 1.92). Corrective, near-term weakness may extend below short-term trend channel support at 1.83 but losses are unlikely to extend below 1.80/1.81, we feel. Clear gains through 1.8550 from here should trigger another fairly rapid advance towards 1.90."
Note that tomorrow we get Canadian GDP, expectations are for +0.2% - a miss could be what is required to crack the ceiling.
14:05: GBP in fresh assault on EUR as stocks recover
Interesting action in the pound euro rate. After having slumped earlier in the day GBP/EUR is now 0.28 pct higher at 1.2160.
Note that the US dollar is asserting itself across the board, and selling in EUR/USD could be weighing on the entire EUR complex, hence we are seeing the gains in GBP/EUR.
Markets are also turning more chipper with some good earnings out of some big name US stocks like Facebook.
On the macro front we see the USD has been supported:
"Data from the US showed that US jobless claims increased more than forecast over the past week, climbing by 19,000 to 348,000. Adding to negativity, US GDP data came in slightly less than expected with the economy growing 3.2% versus the 3.3% expected. Although the figure didn’t meet expectations, the figure was the highest in three years, laying the ground for further improvement in 2014." - Lee Mumford at Spreadex.
Markets are also turning more chipper with some good earnings out of some big name US stocks like Facebook.
On the macro front we see the USD has been supported:
"Data from the US showed that US jobless claims increased more than forecast over the past week, climbing by 19,000 to 348,000. Adding to negativity, US GDP data came in slightly less than expected with the economy growing 3.2% versus the 3.3% expected. Although the figure didn’t meet expectations, the figure was the highest in three years, laying the ground for further improvement in 2014." - Lee Mumford at Spreadex.
12:29: Blame it on the euro - EUR/USD pressuring GBP/USD lower
An insight into the dynamics of the British pound today from FX Market Alerts:
"GBP is lower this morning, with the Cable rate largely driven by selling in EUR/USD. Through 1.6500, the pair remains heavy into support at 1.6470-75 levels, and with stops reported from 1.6460 lower down, these look pretty vulnerable for now.
"As such, EUR/GBP is getting a small bid, as Swiss supranational buying in EUR/USD is presumed to be on behalf of an Asian central bank - no change there then. EUR/GBP stops assumed through .8260 - the high from Wednesday. UK lending data was pretty healthy, though money supply dropped significantly on the month, and was much lower than expected."
"GBP is lower this morning, with the Cable rate largely driven by selling in EUR/USD. Through 1.6500, the pair remains heavy into support at 1.6470-75 levels, and with stops reported from 1.6460 lower down, these look pretty vulnerable for now.
"As such, EUR/GBP is getting a small bid, as Swiss supranational buying in EUR/USD is presumed to be on behalf of an Asian central bank - no change there then. EUR/GBP stops assumed through .8260 - the high from Wednesday. UK lending data was pretty healthy, though money supply dropped significantly on the month, and was much lower than expected."
11:19: Pound / dollar forecasts
UBS:
"As bullish conditions persist, there’s further upside potential to resistance at 1.6747. A break above which would open the way to 1.7043. Support is at 1.6447 ahead of 1.6310."
Forex.com:
"GBP/USD edging lower for a second day as price continues to fail to hold above 1.6600 - potentially in the process of forming a reversal despite solid fundamentals. But bullish trend ~1.6380 still intact."
"As bullish conditions persist, there’s further upside potential to resistance at 1.6747. A break above which would open the way to 1.7043. Support is at 1.6447 ahead of 1.6310."
Forex.com:
"GBP/USD edging lower for a second day as price continues to fail to hold above 1.6600 - potentially in the process of forming a reversal despite solid fundamentals. But bullish trend ~1.6380 still intact."
10:45: The EUR/GBP decline will be slow, but sure
With the EUR/GBP rising on Thursday it is worth taking stock and remembering the big picture.
David Song, Currency Analyst and Daily FX Research, reckons 2014 will see Sterling advance at a steady pace vs the euro:
"Even though the EURGBP is a slower‐burning trade, the long‐term outlook remains tilted to the downside as it retains the bearish trend dating back to 2009. However, a steeper decline appears to be take shape as Mark Carney’s BoE moves away from the easing cycle. With that said, we will continue to look for a series of lower highs to sell the EURGBP, and the pair remains poised to face a pronounced decline in 2014 as the ECB prepares to implement more non‐standard measures in the coming months."
David Song, Currency Analyst and Daily FX Research, reckons 2014 will see Sterling advance at a steady pace vs the euro:
"Even though the EURGBP is a slower‐burning trade, the long‐term outlook remains tilted to the downside as it retains the bearish trend dating back to 2009. However, a steeper decline appears to be take shape as Mark Carney’s BoE moves away from the easing cycle. With that said, we will continue to look for a series of lower highs to sell the EURGBP, and the pair remains poised to face a pronounced decline in 2014 as the ECB prepares to implement more non‐standard measures in the coming months."
10:12: Pressure on sterling builds
We are seeing some selling pressure being exerted on sterling at present.
"Pressure on Sterling builds and a move below 1.21 is in sight." - Caxton FX.
"GBPUSD testing 1.6450 support - break below here paves the way for 1.6380." - Forex.com.
"Pressure on Sterling builds and a move below 1.21 is in sight." - Caxton FX.
"GBPUSD testing 1.6450 support - break below here paves the way for 1.6380." - Forex.com.
10:00: Euro aided by decent eco readings
The euro is on the front foot against sterling.
EU Consumer Confidence improves to -11.7 in January from -13.5 in December.
EU January Economic Sentiment Indicator increase to 100.9 vs 100.4 (December).
EU Services Sentiment up to 2.3 in January from 0.4 in December.
EU Consumer Confidence improves to -11.7 in January from -13.5 in December.
EU January Economic Sentiment Indicator increase to 100.9 vs 100.4 (December).
EU Services Sentiment up to 2.3 in January from 0.4 in December.
10:06: GBP/ZAR lower, but further pressures on ZAR forecast
All eyes remain on the emerging markets where currencies have taken a bashing of late. "The ZAR will likely be among the most pressured units if the EM sell-off continues," say Barclays referring to the South African Rand. We have just updated readers with view on the Rand and Hungarian Forint.
08:42: Forecasting 1.65 to 1.66 band for the British pound to US dollar
"Cable is likely to still trade in the 1.65/1.66 band,after BoE Governor Mark Carney stated that the UK recovery has still “some way to run” before the bank considers interest rate moves and that “the rate rise will be gradual.” EUR-GBP will likely trade close to 0.8250." - UniCredit Bank.
08:35: Safe haven currencies remain well bid
Big rally occurred in the safe haven Yen and Swiss Franc yesterday following the general risk off tone.
"US 10Y yields have been dragged even lower but we think this is likely to correct in the near future offering both USD-JPY and USD-CHF some relief," say UniCredit Bank.
"US 10Y yields have been dragged even lower but we think this is likely to correct in the near future offering both USD-JPY and USD-CHF some relief," say UniCredit Bank.
08:30: British Pound (GBP) forecast in 1.6530-1.6630 range vs USD
The British pound (GBP) is trading higher against the New Zealand dollar today (NZD) however we are seeing weakness against the US dollar (USD). Two overnight events were responsible for these moves, they are listed in the two previous entries.
Despite GBP/USD being lower, Lloyds Bank don't expect any major moves lower:
"Today’s domestic releases look unlikely to trigger much market reaction. The consumer credit and mortgage lending numbers are expected to further highlight the resilience of the consumer sector helped by a pickup in housing activity and easier credit conditions. We expect GBP to remain well supported reflecting the recent run of decent domestic releases. GBP/USD looks likely to remain within the recent 1.6530-1.6630 range."
Despite GBP/USD being lower, Lloyds Bank don't expect any major moves lower:
"Today’s domestic releases look unlikely to trigger much market reaction. The consumer credit and mortgage lending numbers are expected to further highlight the resilience of the consumer sector helped by a pickup in housing activity and easier credit conditions. We expect GBP to remain well supported reflecting the recent run of decent domestic releases. GBP/USD looks likely to remain within the recent 1.6530-1.6630 range."
Overnight Alert: British pound shoots higher vs New Zealand dollar
The pound sterling has shot higher against the New Zealand dollar despite the Reserve Bank of New Zealand's promise to begin raising interest rates soon from the current 2.5%. This tells us markets were confident of a rate hike. The only kiwi negative comment made by the Central Bank Governor Wheeler was his concern about the strong currency.
Overnight Alert: Top 4 takeaway of US FOMC decision
Thanks to Kathy Lien for the following summarisation of the key elements of today's FOMC decision:Fed Tapers by Another $10 billion, Starting February $5 Billion Reduction each in MBS and Treasuries Uber Dove Janet Yellen Supports Taper Decision was Unanimous
